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Digital ad fraud is a Major Economic Crime

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Digital ad fraud funds cybercrime. And cybercrime, in turn, leads to more ad fraud. There is an entire ecosystem set up to steal from the large pool of dollars -- $100 billion spent in digital in the U.S. per year, and $300 billion in digital worldwide.

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Digital ad fraud is a Major Economic Crime

  1. 1. October 2018 / Page 0marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Digital Ad Fraud is a Major Economic Crime Augustine Fou, PhD. acfou [at] mktsci.com
  2. 2. October 2018 / Page 1marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou “there is no law against ad fraud, but a dozen other laws may be applicable. For example, computer crimes (hacking, malware) help ad fraud and, in turn, are funded by it.”
  3. 3. October 2018 / Page 2marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Computer crimesMany of the tech/actions that support ad fraud are computer crimes “computer crimes such as breaking into computers or computer networks. Computer crime can be broadly defined as criminal activity involving information technology infrastructure, including illegal access (unauthorized access), illegal interception (by technical means of non-public transmissions of computer data to, from or within a computer system), data interference (unauthorized damaging, deletion, deterioration, alteration or suppression of computer data), systems interference (interfering with the functioning of a computer system by inputting, transmitting, damaging, deleting, deteriorating, altering or suppressing computer data), misuse of devices, forgery (or identity theft) and electronic fraud. https://en.wikipedia.org/wiki/List_of_computer_criminals
  4. 4. October 2018 / Page 3marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Illegal Access / Breaches Harvesting personal info, ecommerce transactions, other data BreachesIllegal Access https://www.csoonline.com/article/2130 877/data-breach/the-biggest-data- breaches-of-the-21st-century.html
  5. 5. October 2018 / Page 4marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Illegal Interception Keystroke logging to collect logins, passwords, other personal info Source: Freedom to Tinker, Nov 2017 https://www.thedailybeast.com/california-passes-landmark- privacy-bill-to-restrict-data-harvesting
  6. 6. October 2018 / Page 5marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Data interference Alteration or suppression of computer data Buzzfeed, March 2018 Source: http://articles.latimes.com/2013/apr/19/business/la- fi-mo-cookie-stuffing-ebay-20130419 “Laguna Niguel man pleads guilty in 'cookie stuffing' scam against Ebay. The online auctioneer paid Dunning’s company about $5.2 million in 2006 and 2007, the U.S. Attorney said.”
  7. 7. October 2018 / Page 6marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Misuse of Devices Ransomware and malicious cryptomining using humans’ devices https://blog.malwarebytes.com/cybercrime/2018/02/state-malicious-cryptomining/https://www.zdnet.com/article/ransomware-not-dead-just-getting-a-lot-sneakier/
  8. 8. October 2018 / Page 7marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Forgery, falsified profiles Unverifiable lookalike audiences contain fake profiles/preferences Bots pretend to be oncologists by visiting oncology related sites. Bots pretend to be outdoor enthusiasts by visiting outdoor related sites.
  9. 9. October 2018 / Page 8marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Identity theft scenarios Stolen personal info can be sold, and also later used in hacking https://www.experian.com/blogs/ask-experian/heres-how-much-your-personal-information-is-selling-for-on-the-dark-web/
  10. 10. October 2018 / Page 9marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Criminal impersonation Bad guys pretend to be politicians, celebrities to trick consumers
  11. 11. October 2018 / Page 10marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Piracy/Mass Infringement Large numbers of cloned sites containing 100% pirated content Mass infringement sites use pirated content to attract human visitors - Show ads - Attempt to hack them or track them
  12. 12. October 2018 / Page 11marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Copyright infringement Entire pages copied to thousands of other sites, to get free traffic Google search on entire phrase in quotes: http://bit.ly/16H9Gk5 Source: Buzzfeed, October 2018
  13. 13. October 2018 / Page 12marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Copyright/Trademark Laws Multiple forms of fraud, violating different laws Quote from Doc Searls, 1. “All four ads are flat-out frauds, in up to four ways apiece: All are lies (Tiger isn’t gone from Golf, Trump isn’t disqualified, Kaepernick is still with the Niners, Tom Brady is still playing), violating Truth in Advertising law. 2. They were surely not placed by ESPN and CNN. This is fraud. 3. All four of them violate copyright or trademark laws by using another company’s name or logo. (One falsely uses another’s logo. Three falsely use another company’s Web address.) 4. All four stories are bait-and-switch scams, which are also illegal. (Both of mine were actually ads for diet supplements.)”
  14. 14. October 2018 / Page 13marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Counterfeit goods Just like fake Gucci watches and LVMH handbags, fake digital ads
  15. 15. October 2018 / Page 14marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Money laundering scenario Dollars are laundered as digital media ad spend on “cash out” sites 1. Buy digital media via ad exchanges on sites directly or indirectly owned by the same entities 2. Pay “ad tech tax” (cut to middlemen) 3. Collect dollars from “cash out” sites, fully laundered
  16. 16. October 2018 / Page 15marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Credit card fraud scenario Tiny transactions automated on millions of stolen card numbers Amateur Criminals Buy HDTV at Walmart with stolen credit card; get caught, card is deactivated. Pro Criminals Automate millions of 99 cent in- game purchases of “power-ups, shields, virtual goods” to harvest dollars, fully laundered.
  17. 17. October 2018 / Page 16marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Wire fraud scenarios Knowingly misrepresenting the capabilities of the … technology “Allegedly engaged in a multi-million dollar scheme to defraud investors, as well as a doctors and patients. charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. Holmes and Balwani are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. Holmes and Balwani were accused of knowingly misrepresenting the capabilities of Theranos' proprietary blood testing technology. The two allegedly knew there were "accuracy and reliability problems," and that it "could not compete with existing, more conventional machines," the US Attorney's office said.” http://money.cnn.com/2018/06/15/technology/elizabeth- holmes-indicted-theranos/index.html
  18. 18. October 2018 / Page 17marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Securities fraud scenarios Deceptive practice of inducing investors with false information • Revenues derived from illegal activities • Inflating revenue, profits through ad fraud • Overstating subscribers, active users, ARPU • Selling counterfeit services and products • Misrepresenting the capabilities of services, products
  19. 19. October 2018 / Page 18marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Ad fraud is “cash out” for criminal activities
  20. 20. October 2018 / Page 19marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou The most profitable criminal activity 2,500 - 4,100% returns 11% returns1% interest digital ad fraud stock marketbank interest “where else can I get multi- thousands percent returns on my money? Right. Nowhere.”
  21. 21. October 2018 / Page 20marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou “Ad fraud is at ALL TIME HIGHS both in RATE and in DOLLARS… … and what’s worse is fraud detection is not catching it, so people have a false sense of security.” Source: https://www.slideshare.net/augustinefou/state-of-digital-ad-fraud-q2-2018
  22. 22. October 2018 / Page 21marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Two main kinds of ad fraud “Everything else is a derivative of (e.g. cost-per-install fraud), or in support of (e.g. tricking measurement, attribution, covering tracks) the above 2 forms of ad fraud.” Impression Fraud (CPM) Fraud (includes mobile display, video ads) Click Fraud (CPC) Fraud (includes mobile search ads)
  23. 23. October 2018 / Page 22marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Why? Largest buckets of spend Leads (CPL) Sales (CPA) Lead Gen $2.0B Other $5.0B • classifieds • sponsorship • rich media Impressions (CPM/CPV) Clicks (CPC) Search 46% Display 31% Video 14% 91% digital ad spend Source: IAB FY 2017 Report Estimated >$100B in 2018 9% spend
  24. 24. October 2018 / Page 23marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou DDoS traffic for ad revenueDDoS attacks overwhelm with traffic; now use traffic to make ad revenue Google Digital Attack Map
  25. 25. October 2018 / Page 24marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou 75-90% of traffic/clicks are fake Not much as changed since 2014, except digital ad spend is way up https://www.dianomi.com/cms/wp- content/uploads/2018/06/RobotTrafficReport- US_14June2018_V5-draft.pdf 2018 $100B in ad spend 2015 $60B in ad spend https://oxford- biochron.com/downloads/OxfordBioChron_Qua ntifying-Online-Advertising-Fraud_Report.pdf 2014 $50B in ad spend http://adage.com/article/datadriven- marketing/kraft-rejects-75-85-impressions-due- quality-issues/295635/
  26. 26. October 2018 / Page 25marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou #defendthespend “solving ad fraud will reduce the flow of dollars to what amounts to ‘major economic crimes.’ Then, and only then, will we get back to REAL digital marketing.”
  27. 27. October 2018 / Page 26marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou About the Author Augustine Fou, PhD. acfou [@] mktsci.com
  28. 28. October 2018 / Page 27marketing.scienceconsulting group, inc. linkedin.com/in/augustinefou Dr. Augustine Fou – Independent Ad Fraud Researcher 2013 2014 Published slide decks and posts: http://www.slideshare.net/augustinefou/presentations https://www.linkedin.com/today/author/augustinefou 2016 2015 2017

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